Reliance Industries slips 4% on calling-off Saudi Aramco deal

Saudi Aramco was suppose to acquire 20 per cent stake in Reliance's oil to chemicals (O2C) business

Shares of Reliance Industries were down 4 per cent at Rs 2,368.20 on the BSE in Monday’s intra-day trade after the company called-off the deal with global oil giant Saudi Aramco for a 20 per cent stake acquisition by the Saudi firm in the oil to chemicals (O2C) business of the former company.

With today’s intra-day fall, the stock of RIL has declined 14 per cent from its record high level of Rs 2,750 touched on October 19, 2021. At 09:54 am; it was trading 3 per cent lower, as compared to 0.56 per cent decline in the S&P BSE Sensex.

RIL and Saudi Aramco signed a non-binding Letter of Intent in August 2019 for a potential 20 per cent stake acquisition by Saudi Aramco in the O2C Business of Reliance. Over the past two years, both the teams made significant efforts in the process of due diligence, despite Covid restrictions.

Reliance recently unveiled its plans for the New Energy & Materials businesses by announcing the development of Dhirubhai Ambani Green Energy Giga Complex at Jamnagar, which accounts for a major part of the O2C assets. It will be amongst the largest integrated renewable energy manufacturing facilities in the world.

Due to evolving nature of Reliance’s business portfolio, Reliance and Saudi Aramco have mutually determined that it would be beneficial for both parties to re-evaluate the proposed investment in O2C business in light of the changed context. Consequently, the current application with NCLT for segregating the O2C business from RIL is being withdrawn, RIL said in a statement.

According to ICICI Securities, O2C stake sale and subsequent value unlocking, which would have further strengthened balance sheet of RIL, is delayed. “We await further clarity on timelines of stake sale. However, O2C business prospects have improved owing to increase in GRMs and fuel demand post second wave of Covid-19. It is expected to report steady profitability in the near term,” the brokerage firm said in a note.